Rising age of cars causes sales of OEM aftermarket parts to slide

In the past, the rising age of vehicles on the road has been good news for IAMs but bad news for OEMs.

Vehicle owners are likely to buy fewer OEM parts as vehicle ages extend beyond two years.

For passenger cars less than two years old, the OEM dealer network provides service more than 50% of the time. The dealers’ share of service then declines to about 15% for vehicles older than eight years.

High prices, customers’ need for fast delivery slow OEM parts sales

In addition, OEM parts manufacturers face these challenges in selling their parts for older cars:

Do-it-yourself (DIY) car owners are more likely to buy aftermarket parts, which typically cost less than OEM parts. DIY-ers shop many sources online for the best pricing and availability.

Independent Service and repair shops are likely to buy from suppliers that can deliver fast and reliably. Most shop for parts online, and they’ll buy from whoever can provide parts most reliably. But availability of parts is typically not great from local OEM dealerships, which often carry incomplete inventories.

Company commits to on-time, same-day deliveries with zero errors

Supply chain gets an overhaul

To achieve the ambitious goals for the PRO Service program, Volkswagen needed massive changes in their parts distribution model. They also needed new information systems to manage their supply chain and warehouses.

Shipments and receipts become visible across the network

The WM provides full product traceability. DCs know exactly where each product is, where it came from, and where and when it’s delivered.

The new system provides the below added benefits for VW Spain and its logistics partners:

The network now delivers complete orders on time. Fulfillment errors are near zero.

Dealers can design better warehouse logistics processes based on the requirements of each order, customer and part. They improve the efficiency of both receiving incoming orders and preparing outbound orders for shipment.

Dealers design their warehouses with dynamic picking management and optimized item location, based on the unit sales and size of each product.

The DCs automate order preparation based on the flow (urgent, stock and display). Customers who will pick up at the warehouse get top priority. Orders for display stock get lower priority. Orders for inventory stock get the lowest priority.

Each DC maintains accurate on-hand inventory data. The WM system prompts warehouse staff to perform perpetual inventory counts. It also prompts to check that minimum on-hand quantities remain during order picking.

By automating manual processes, the DCs also improved labor efficiency.

The warehouses improved space utilization. The Generix WM categorizes stock by size or expected rotation velocity. It recalculates the right rotation based on picking processes, and it uses dynaming picking management.

They reduced the amount of time and labor needed to fill orders. VW Spain can now deliver to some customers as many as four times a day.

New warehouses come online in 3 to 5 days

VW Spain has simplified and standardized communications and processes across the network of warehouses. By doing so, they greatly accelerated the deployment of new warehouses. They can implement the Generix WM in a new location in just three to five days.

VW eliminates reasons not to buy OEM parts

With all these improvements in supply chain execution, VW Spain helps service shops ensure they can keep their promises to their customers. Their OEM service and repair parts now compete on the strength of VW’s logistics execution.
By adding so much value through logistics, VW Spain is erasing several big reasons why some repair shops don’t buy OEM parts.

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About Generix Group North America

Generix Group North America has been developing and implementing their best-of-breed supply chain optimization systems. SOLOCHAIN is a world class Warehouse Management System (WMS) and Manufacturing Execution System (MES), with implementation sites spanning the globe. This solution allows manufacturing as well as logistics companies to optimise their operations across the supply chain. SOLOCHAIN is a web-based application that provides a scalable and easily adaptable platform, that integrates the latest technologies. Fast, intuitive user interfaces translate into better control, increased mobility and a more productive work force